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Research
HCL Technologies - 1QFY2016 Result Update - Angel Broking
Posted On : 2015-10-22 22:02:23( TIMEZONE : IST )
For 1QFY2016, HCL Technologies (HCL Tech) posted results just in line with our expectations. The company posted a 0.5% sequential growth in USD revenues to US$1,545mn V/s US$1,547mn expected. On constant currency (CC), the company posted a 1.2% qoq rise in sales. On the operating front, EBIT margins came in ahead of our expectations at 20.5% V/s an expected 19.1% and V/s 20.2% in 4QFY2015, a qoq contraction of ~111bp. However, after adjusting for a provision of US$18.4mn for a client, the EBIT margin came in at 19.6%. Consequently, the Adj. PAT came in at Rs. 1,726cr (V/s Rs. 1,741cr expected) a dip of 3.2% qoq. We maintain our Buy rating on the stock with a target price of Rs. 1,132.
Quarterly highlights: HCL Tech posted a 0.5% qoq growth in USD revenues to US$1,545mn V/s an expected US$1,547mn. On CC, the company posted a 1.2% qoq rise in sales. In terms of geographies, the US grew by 0.7% qoq CC, while Europe grew by 5.6% qoq CC. In terms of services, it was a broad based growth across segments. In terms of verticals, Financial Services posted a qoq CC growth of 1.9%, Manufacturing posted a qoq CC growth of 0.5%, Life Sciences & Healthcare posted a qoq CC growth of 4.3%, and Public Services posted a qoq CC growth of 4.9%. On the operating front, the EBIT margin came in at 20.5% V/s an expected 19.1% and V/s 20.2% in 4QFY2015, i.e. a qoq contraction of ~111bp. However, after adjusting for a provision of US$18.4mn for a client, the EBIT margin came in at 19.6%. Consequently, the Adj. PAT came in at Rs. 1,726cr (V/s Rs. 1,741cr expected), a dip of 3.2% qoq. However, ex-adjustment, the PAT came in at Rs. 1,823cr.
Outlook and valuation: We expect HCL Tech to post a USD and INR revenue CAGR of 13.0% and 13.2%, respectively, over FY2015–17E. Given the, order book position, which is 10% higher than the highest and stock valuations, which we believe are attractive given operating ROE's higher than 35%. Thus, we recommend a Buy on the stock.
Shares of HCL TECHNOLOGIES LTD. was last trading in BSE at Rs.861.35 as compared to the previous close of Rs. 864.95. The total number of shares traded during the day was 69839 in over 3765 trades.
The stock hit an intraday high of Rs. 868.6 and intraday low of 852.55. The net turnover during the day was Rs. 60155684.
